Agrify Corporation (Nasdaq: AGFY) is buying the distillation company Lab Society in a deal valued at $8 million. Agrify said in a statement that Lab Society’s annual revenue for 2021 was approximately $10 million, and the acquisition is expected to be accretive in early 2022. The acquisition is part of Agrify’s strategy to expand beyond just lighting and cultivation software.
“We are ecstatic to add Lab Society to our portfolio of high-quality extraction solutions,” said Raymond Chang, Chairman, and CEO of Agrify. “As federal legalization edges closer to reality, we believe the United States government will likely increase its role in setting the quality, consistency, and safety standards for medical and recreational cannabis products. By owning the top key solutions that produce the highest quality and the widest range of extracted cannabis products at scale, we expect it will provide Agrify with a significant competitive differentiation, enhanced customer value-add, superior industry leadership position and significant growth opportunities globally.”
Since September 2021, Agrify has been on a tear buying up companies in the extraction space. These acquisitions include Precision Extraction Solutions, which is involved in developing and producing high-quality hydrocarbon extraction solutions, Cascade Sciences which is known for developing and producing high-quality vacuum purge ovens and decarboxylation ovens, and also PurePressure, a maker of high-quality solventless extraction solutions. Lab Society brings distillation and solvent separation extraction solutions to the table.
Despite a recent short-seller report, Agrify stock has been moving higher over the past few days. Shares were lately selling at $6.39, moving up from a recent low of $5.28.
The purchase price for Lab Society consists of $4 million in cash and $4 million in unregistered shares of Agrify common stock, subject to adjustments as set forth in the definitive agreement. There is also an additional earn-out opportunity of up to $3.5 million if the revenue generated from Lab Society’s products reaches certain milestones in 2022 and 2023.
Lab Society was founded in 2015 and is headquartered in Boulder, Colorado. The company has a proprietary software, called EliteLab that provides the comprehensive ability to maximize hardware utilization featuring control of temperature control units (TCUs), pressure controllers and gauges, balances, and scales, and agitation stir controllers. The company said that the ability to take cannabis compounds distilled into their pure forms, and then recombine them into specific, purposeful end-products could have significant potential for the pharmaceutical industry in the future.
“We are excited to be a part of Agrify’s extraction division,” said Michael Maibach Jr., Founder and CEO of Lab Society. “With a much larger sales team and additional resources, we are excited to be in a position to drive rapid growth and future innovative product development.”